Punitive Damages For Break Violations?
May 15, 2006
And every lawyer representing employees should be aware of the Bender v. Darden Restaurants, Inc.case (9th Cir. 2002) 26 Fed. Appx. 726, published only in the Federal Appendix (thus not [yet] citeable in Federal Court), wherein the 9th Circuit held that meal and rest period violations can support a punitive damage award.
"To sustain an award of punitive damages, a plaintiff need only prove a prima facie case of liability and show actual injury as a result of the wrongful conduct. Id. at 1165. Appellants had a cause of action under California Labor Code sections 226.7(b) (mandating payment of "one additional hour of pay at the employee's regular rate of compensation for each work day that the meal or rest period is not provided") and (authorizing employees to "sue directly . . . for any wages or penalty due him under [the Labor Code]"). They also suffered actual economic harm as a result of being denied rest and meal breaks. Therefore, the punitive damages award was properly predicated on the denial of breaks."
Most defense lawyers believe that punitive damages can never be predicated upon a meal period or rest period violation. However, not one of them has managed to persuade any of the judges handling our meal and rest period cases to strike punitive damage prayers.
I am very surprised by this. Is this based on a conversion claim? What is the actual cause of action for which punitive damages are being sought? Just a simple violation of 226.7? So are punitive damages also then recoverable under a violation of 510/1198 (overtime) in addition to all the other remedies?
Posted by: Primo | May 15, 2006 at 12:05 PM
The cause of action was not based upon conversion. It was based solely on the violation of the IWC wage orders. We have often had judges note (and there is authority for this proposition, but I don't have it handy) that after trial, we would have to elect between any awards for penalties and any punitive damage awards. That issue may be significant in the inevitable Wal-Mart appeal. In Bender's case, keeping the seven-figure punitive damage award was a no-brainer.
Posted by: michael walsh | May 15, 2006 at 12:33 PM
I think 218 creates the statutory cause of action to enforce the 226.7(b) remedy. In fact, that's a major reason why I believe that the 226.7(b) remedy is a "wage": only "wage claimants" may bring suit under 218.
I'm still pondering your other good questions.
Posted by: dogfacegeorge | May 15, 2006 at 12:45 PM
Although I agree with your conclusion, I think that saying 226.7 is a wage because of 218 is a bit circular. Furthermore, 218 mentions penalties, not just wages.
Posted by: Primo | May 15, 2006 at 05:15 PM
We have to answer a fundamental question: Did the Legislature intend that an employee could recover the 226.7(b) remedy in a suit at law? Or did the Legislature intend that the employee could reover the remedy solely in an administrative proceeding before the DLSE?
If the remedy is a "wage," then 218 provides the statutory cause of action to recover that wage in a lawsuit.
If, on the other hand, the remedy is a "penalty," then there is NO statutory cause of action to recover that penalty in a lawsuit. 218 does NOT create a cause of action for "employees"; it creates a cause of action for "wage claimants." An employee who is owed ONLY a penalty cannot bring suit for the penalty because the employee is not a "wage claimant." (An employee who is owed a wage can bring suit for the wage AND any penalties due.) Thus, if the remedy is a "penalty," the only statutory enforcement mechanism is an administrative proceeding before the DLSE. All the "meal period" lawsuits throughout the state should be dismissed.
I think it is more likely that the Legislature intended that "wage claimants" could bring suit to recover the "pay" mandated by 226.7(b).
Posted by: dogfacegeorge | May 17, 2006 at 10:37 AM
I disagree about the argument that "An employee who is owed ONLY a penalty cannot bring suit for the penalty because the employee is not a "wage claimant.""
Labor Code 218 is not the only basis for claiming a private right of action.
What about 17200? Where is it written that a person cannot get restitution of a penalty that the law mandates to be paid upon the occurrence of a particular event (the failure to permit a break)?
Posted by: | May 17, 2006 at 04:55 PM
"What about 17200? Where is it written that a person cannot get restitution of a penalty that the law mandates to be paid upon the occurrence of a particular event (the failure to permit a break)?"
I agree, but most judges do not. They say that the UCL cannot be used by private litigants to obtain restitution of penalties because penalities are not vested rights, and thus are not subject to equitable conversion. I disagree because this particular "penalty" has a very peculiar feature - it IS a vested right.
I also want to clarify my earlier post. I think that employees CAN bring a private suit for the "penalty" on a breach of contract theory. Contracts incorporate the relevant statutory law. I just think that employees cannot bring a STATUTORY cause of action if the remedy is classified as a "penalty."
Posted by: dogfacegeorge | May 18, 2006 at 10:48 AM